Seeks to clarify issues in respect of apportionment of input tax credit (ITC) in cases of business reorganization under section 18 (3) of CGST Act read with rule 41(1) of CGST Rules

Last updated: 24 March 2020

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This circular clarifies how Input Tax Credit (ITC) should be apportioned and transferred when a business undergoes reorganisation, such as a merger, demerger, or change in ownership. It addresses taxpayer queries regarding Section 18(3) of the CGST Act and Rule 41(1) of the CGST Rules. The aim is to provide clear guidance on these complex scenarios.

Circular No.133 03/2020-GST F.No. CBEC-20/06/13/2019-GST Government of India Ministry of Finance Department of Revenue Central Board of Indirect Taxes Customs GST Policy Wing *** New Delhi, dated the 23rd March, 2020 To, The Principal Chief Commissioners/Chief Commissioners/Principal Commissioners/ Commissioners of Central Tax (All) / The Principal Director Generals/ Director Generals (All) Madam/Sir, Sub: Clarification in respect of apportionment o

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FAQ :

The circular aims to clarify issues concerning the apportionment and transfer of Input Tax Credit (ITC) when a business undergoes reorganisation like merger, demerger, or change in ownership.

The clarification is in respect of Section 18(3) of the CGST Act, read with Rule 41(1) of the CGST Rules.

The circular covers reorganisations such as merger, demerger, amalgamation, and any change in the constitution or ownership of a business.

Representations have been received from various taxpayers seeking clarification on the apportionment and transfer of ITC in cases of business reorganisation.

This circular was issued on the 23rd March, 2020.